Hi All, I’m sorry about such a quick post a few minutes ago. I was trying to type with my one finger as fast as I could. And I must say, that one finger was shaking. I realize I spelled a few words wrong but I was going fast and not thinking clearly. I wanted to get a post on-line before the earnings were reported. I’m trying to keep this as close to live trading as I can. Plus I wanted my finger on the mouse to make any quick move I needed to.
Let me review what went on with the NFLX trade. I owned 2500 shares of NFLX. Today I sold 25 contracts of the $120 Covered Calls to expire this Friday. I figured, I own the stock anyway so I might as well bring in some premium money. If NFLX had bad earnings the stock would go down but like I said I own the stock, so I was in whether the stock went up or down, it didn’t matter so let me make some money with a Call. If the stock went up I would make money on the stock and with the premium. I went with a $120 Strike Price to give me some space to make money with the stock and at the same time I got a good premium.
Right at the close I sold another 10 contracts of the $125 Naked Call expiring Friday the 29th. When I already had a huge position, why did I do this you ask? I figured if there was bad earnings and the stock went down I would bring in more premium and never have to buy the stock. This is my way of hedging. If the earnings were good I sold the $125 Calls so that would give me plenty of time to purchase 1000 more shares before the price of the stock went to my Strike Price. It would be a huge jump from the $107.89 stock price at the close.
After all this NFLX came out with good earnings but the revenue was a little off. Immediately the stock went up 10 points. This was great for me! I owned 2500 shares and the stock was soaring. My only worry was that I had 10 contracts of Naked Calls. I put and after hours order in to buy 1000 shares at $118. It took a while but I did get executed. The stock jumped around a while between $118 and $119 area and now it’s down a little to $115 as I write. Tomorrow will be very interesting. The stock should fly but with the world news the way it’s been, you never know. Here’s the order for the 1000 shares to cover the $125 Call.
Buy 1000 Shares NFLX @ $118
This was more action I wanted with an earnings report due. I felt the $120 Call was the only thing to do and I feel the $125 Naked Call was a prudent trade. Let’s hope NFLX continues to move tomorrow.
If you have any questions about these trades email me at Coachsjc@gmail.com.
Steve
The Options Coach